Our open letter to the Mayor of London on retaining the Congestion Charge exemption

Sadiq Khan, Mayor of London

City Hall

London SE1

February 23, 2018

Dear Mr Khan,

As a key part of London’s transport network, completing over 25,000 journeys every day in the capital, Addison Lee values its relationship with Transport for London and with City Hall. We share your policy goal, re-iterated by TfL in its recent policy statement,of ensuring that London has ‘a safe, secure, accessible world-class taxi and Private Hire Vehicle (PHV) service with opportunity for all providers to flourish.

To this end, we were supportive recently of increases in private hire licensing fees to fund enhanced regulation and have been consistent advocates of TfL’s policy of raising standards across our industry. However, I feel compelled to write an open letter to you with respect to recent moves to re-visit the Congestion Charge exemption for PHV, any removal of which would, Addison Lee believes, seriously jeopardise your aforementioned policy goals.

You will be aware of the highly competitive nature of the capital’s PHV industry, with 2,400 operators licensed city-wide. It’s an innovative sector in which Addison Lee, among others, has invested in improvements for passengers – for example, in newer, cleaner vehicles, app-based technology and enhanced safety measures. Yet we operate against a backdrop of a distorted marketplace in which some participants have pursued a policy of growing market share by offering fares substantially below the cost of serving passengers.

Removing the Congestion Charge exemption would represent a very significant cost to the industry of as much as £250 per driver, per month, based on our data. We would anticipate that market participants who have subsidised fares would very likely absorb these costs to capture greater market share, keeping fares artificially low. Other operators, who have to work to economic norms and do not have the ability to absorb the Congestion Charge, would see these additional costs bourne by drivers.

As well as seriously jeopardising the wages of tens of thousands of PHV drivers, the net impact of taking money out of the industry to pay the Congestion Charge would also be to undermine TfL’s efforts to raise quality and safety standards. Funds required by the industry and drivers to invest for improvements in safety standards would accrue to TfL instead.

Given the lack of a level playing field referred to above, we would anticipate that a significant number of local operators, many of which are long established in their communities, will face a struggle to survive as they lose drivers. The number of operators has declined by more than 500 over two years and an end to the Congestion Charge exemption would drive more of them out of business.

Throughout its policy documentation, TfL refers to private hire as an integrated part of London’s transport ecosystem. As outlined in our written response to the Mayor’s Transport Strategy last year, we strongly agree with the view that both the PHV sector and London taxis should be treated as an extension of the public transport network. So, it would also seem inconsistent, illogical and indeed anti-competitive to levy a charge on private hire vehicles which would not be applicable to black taxis.

Private hire vehicles play a vital role in helping to move millions of people safely around the capital each day – they are particularly important to certain groups such as vulnerable adults, as TfL noted in its policy statement on private hire only this month – and can therefore see no possible reason why private hire vehicles should be treated any differently from taxis with respect to the Congestion Charge.

Addison Lee is keen to support TfL’s drive to improve London’s environment but firmly believes removing the Congestion Charge Exemption is the wrong way to do it. Under any removal, fares are unlikely to rise, for reasons discussed earlier, leaving the volume of PHV passenger demand in central London unchanged.

To pursue environmental objectives, we believe it would be far more effective to focus on the laudable aims of the Ultra-Low Emission Zone – to ensure all vehicles entering central London are clean – and to introduce further requirements which would see an earlier end to oldest vehicles being relicensed. We are also keen to work with TfL and with City Hall on the installation of more electric charging points to enable the conversion of private hire fleets to electric power. Our argument is to tackle the source of pollution directly, rather than to distort an industry important to the transport infrastructure of London by selectively imposing a tax on PHV drivers.

Addison Lee will work positively with TfL on the big issues facing public transport in the capital, such as safety, the environment and congestion. However, we are clear that the removal of the Congestion Charge exemption, far from helping with these issues, will be counter-productive. On this basis, I would ask you to put aside any possible change to the exemption.

Thank you for your ongoing hard work on building London’s transport system for the future, and I trust you will consider our request favourably. We are, of course, happy to discuss this issue with you at any time.